COMMISSIONER OF INCOME TAX Vs. CHUNILAL RAMESHWAR LAL

JUDGEMENT

(1.) The following question has been referred to this Court under Section 66(1) of the Indian Income-Tax Act, 1922 (hereinafter referred to as the Act), by the Appellate Tribunal. Patna for its opinion:--

(2.) The assessee is an individual and carries on wholesale business in cloth under the name and style, Messrs. Chunilal Rameshwarlal at Deoghar. For the purpose of determination of taxable income the assessee claimed deduction of a sum of Rs. 125 on account of the payment made by him to Deoghar Municipality as professional Tax under Section 150A of the Act for the assessment year of 1961-62. Both the Income-tax Officer and the Appellate Assistant Commissioner of Income Tax disallowed the deduction. However, the Income Tax Appellate Tribunal accepted the contention of the assessee that the tax paid to the municipality was not a personal Tax levied on the profits or gains of any business or assessed in proportion to or otherwise on the basis "of any such profits or gains but was a tax paid under Section 150A read with Section 82(1)(ff) of the Bihar and Orissa Municipal Act, 1922, in relation to the premises where the business was carried on; and, as such, the payment did not fall under Section 10(4) of the Act. Hence, it allowed deduction under Section 10(1) of the Act. In pursuance of an application by the Income Tax Commissioner, the aforesaid question has been referred to this Court by the Income-tax Appellate Tribunal, Patna, for its opinion.

(3.) Section 82(1)(ff) of the Bihar and Orissa Municipal Act, 1922 (hereinafter referred to as the Municipal Act), empowers the Municipality to impose a tax within its limits on the trades, professions, callings and employments specified in the Fourth Schedule at such rates not exceeding the rates specified therein as may from time to time be determined by the Commissioners at a meeting subject to the approval of the State Government. Section 150A of the Municipal Act provides for taking out a half-yearly licence by the person for carrying on professions, trades or employments specified in the Fourth Schedule and paying a tax assessed on him in pursuance of Clause (ff) of Sub-section (1) of Section 82 of the Municipal Act. 'The second proviso of Section 150A of the said Act provides for exemption of the payment of the tax in case of a person who exercises any such profession, trade, calling or holds any employment within the municipality and whose taxable income does not exceed fifteen hundred rupees, per annum or the value of whose place of business does not exceed ten rupees per mensem or whose income from employment does not exceed twenty-four hundred rupees per annum. The proviso contemplates three kinds of exceptions depending on